Making the business case for trust: a new book compiles six topics on why and how it works.
By Steven N. Pyser, Assistant Professor, Temple University, Fox School of Business
Historically, winning business models applied brute capitalism through a global Darwinian endgame of profit maximization. Powerful global economies and businesses are recognizing a new paradigm when trust is bridged with multiple internal and external stakeholders – corporate community, employees and marketplace.
Trust Inc.: Strategies for Building Your Company's Most Valuable Asset is a business and organizational learning guide exploring six topics on trust, revealing how the power of trust influences and builds business success to guide us on a new path.
Emerging Thinking Is Changing Business-As-Usual
Today, corporate “survival of the fittest” must pivot and adapt to remain competitive. Emerging thinking is rebalancing the “how business is conducted” equation with trust metrics. This new bottom line now includes quantifiable connections between trust and CSR as a mechanism for successful delivery on profitability, mission, vision, branding and loyalty.
The case for how large corporations around the world communicate the impact of their nonfinancial activities has been made by Dr. S. Prakash Sethi in the 2012 Report on the Scope and Quality of CSR Reports from the World’s Largest Corporations. In other writings, Dr. Sethi has also made a compelling case for the need for interventions of a productive trust dynamic based on honesty and fair treatment. With these rankings and literature, we find well-documented business cases for trust. Here are a few of recent headlines alluding to cases where trust could make notable impact:
- The Washington Post reported “the federal government imposed an estimated $216 billion in regulatory costs on the economy (in 2012); nearly double its previous record.”
- The cost of the tort litigation system alone in the United States is over $250 billion – or 2% of GDP. (Forbes, January 2012)
- “Americans are fed up with politics, not government, study says” (trust in government at 50 year low for five years running). – (September 2012, Government Executive)
- The Big 4 accounting firms’ aggregate global revenue is $110 billion, of which between 40-50% is made up of audits. (Going Concern, January 2013)
- The six biggest U.S. banks, led by JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC), have piled up $103 billion in legal costs since the financial crisis, more than all dividends paid to shareholders in the past five years. (Bloomberg, August 2013)
Making the Case for Trust
Barbara Brooks Kimmel, co-founder and executive director of Trust Across America-Trust Around the World, has edited Trust Inc.: Strategies for Building Your Company's Most Valuable Asset. Each author represented in the book reveals insights, applications and lessons for CEOs, boards, senior management and small business owners. The title previews an interesting and strong link between the message of the book with lists and graphics depicting relevant applications to today’s current competitive global business climate. The Appendix provides working definitions of “trust,” examples of Vision and Values Statements and a Call to Action.
I was fortunate to be one of the 30+ trust experts Kimmel selected to “make the case for trust” in this new book.
She writes in her introduction, the essays contained in Trust Inc. "describe better ways to do business and improve the odds for long-term success and sustainability. Regardless of whether the reader is the owner of a small startup or the CEO of a Fortune 500 company, this book will provide lessons in how to infuse trust into any organization and reap the resulting rewards."
The book is divided into six sections where experts share their insights on:
- Why trust matters
- How trust works in practice
- What it takes to be a trustworthy leader
- How trustworthy teams impact business
- How to restore trust
- A new paradigm for organizational trust (where the essay I author is housed)
The essay, “Capitalism and High Trust: Leveraging Social Worlds as Intangible Assets,” was inspired by pracademics, applied practice and rigorous research of the past 15 years. It follows important work of my mentors, Stephen B. Young, Global Executive Director of the Caux Round Table and author of Moral Capitalism: Reconciling Private Interest with the Public Good, and the late Barnett Pearce, CMM Institute for Personal and Social Evolution and author of Making Social Worlds: A Communication Perspective.
It begins as follows:
“Achieving excellence in today's global business economy requires a winning strategy, an understanding of performance standards and a working definition of workplace trust. Business people can lay a strong foundation for success by recognizing the benefits of authentic interpersonal relationships across their organizations. These elements of communicational intelligence engender trustworthy behaviors with a multiplier effect when incubated in high trust workplaces.”
The essay ends with this thought: “Building a culture of high trust by leveraging the ‘right’ conversations as intangible assets is the antiseptic and new structure global capitalism requires.”
Trust Builds More the Profit – It Builds Positive Connections
The book's conclusion, written by Robert Easton, a senior managing director at Accenture, suggests most of the dialogue in today's world is about the trust deficit or distrust. Instead, Easton argues that we need to think more constructively about "positive trust" – a force for helping people, corporations and societies to thrive.
"We must encourage leaders to view trust as more than just an instrument to improve corporate profit and organizational accomplishments to one of fundamentally increasing the total positivity of the organization."
With contributions from some of the brightest minds in the world of trust, including Stephen M.R. Covey, Ken Blanchard, Kouzes and Posner and many others, I highly recommend this concise, thoughtful and well-organized compilation of essays on this important topic. Those of us who are counsel on compliance/business ethics, corporate responsibility practitioners and those who advocate on its importance will find much to learn in Trust Inc.